The Government made mental health a "big priority" making an inquiry an election promise, and is planning major reform - but first, they want to know what will work.

"Before you start ploughing resources in, you've got to have a good plan."

Health Minister David Clark said a royal commission of inquiry was ruled out as it would take too long.

'Something has to give'

National MP Judith Collins, appearing alongside Mr Twyford, said the Government's running its finances too tight and "something has to give" if it's going to pour more funding into mental health.

"I put a big lot of funding into mental health in prisons because people won't say they have a mental health problem to the same extent as you would say, 'I've got the flu,'" she said, referring to her time as Minister of Corrections.

"We used to lock people up into mental homes, asylums, until the early '90s when the Western world basically emptied them out and said, 'Off you go.' A whole chunk ended up in prisons instead."

She says despite the progress, there is still a stigma that mental health problems are "contagious" and "difficult"

"Actually, it is pretty much a normal part of a lot of people's lives... until we get that collective attitude, we're not going to bring about the changes."

Auckland University law professor Ron Paterson will chair the inquiry, pocketing $1400 a day.